Yellowknife (Oct 18/04) - Supporters of the Mackenzie Valley Pipeline say loan guarantees for the Alaska Pipeline are a threat to the Mackenzie pipeline.

While Bob Reid, president of the Aboriginal Pipeline Group, said to a degree the two projects are complementary.

"North America needs gas from the Delta and the North Slope, but it's important the Mackenzie goes first," he said.

The Alaska Pipeline has a capacity of four to five billion cubic feet per day and there's roughly one billion cubic feet per day proposed for the Mackenzie Pipeline.

If Alaska is built first, the American pipeline could be expanded for a much lower cost than building the Mackenzie, said Reid.

"If Alaska goes first, the Mackenzie Valley Pipeline would be delayed substantially, if built at all. That's the issue," said Reid.

The fear of the Alaska Pipeline being built first was enhanced last week when the U.S. Senate agreed to $18 billion in loan guarantees for the project.

Resources, Wildlife and Economic Development Minister Brendan Bell was happy that there were no price guarantees in the new American legislation.

"ConocoPhillips argued they needed a price floor provision. That did not make it through," said Bell.

In the past, American President George Bush has been very anti-price floor, said Bell.

What the new U.S. legislation does provide, apart from loan guarantees, is money for training and accelerated depreciation schedules, "which are not dissimilar to initiatives in Canada," said Bell.

While he argued the floor price legislation ConocoPhillips was looking for was market distorting, Bell added the territorial government is not against the building of the Alaska Pipeline, as long as the Mackenzie Valley Pipeline is constructed first.

Fred Carmichael, chairman of the Aboriginal Pipeline Group (APG), called the move in the United States Senate a wake-up call for the federal government and for the aboriginal people of the North.

Carmichael said he is concerned the Mackenzie Valley Pipeline may be delayed if the Alaska Pipeline goes first. "Our people need work and the pipeline will be a long-term benefit for people in the Valley," said Carmichael.

Mackenzie Gas Project spokesman Hart Searle said time is of the essence if the Mackenzie Valley Pipeline is to be built.

"The development of the Alaska Pipeline in the near term poses a threat to the commercial viability of the Mackenzie Pipeline," said Searle.

Those commercial pressures come about as a result of cost pressures on materials and supplies, as well as potential impacts on the availability of experienced contractors, said Searle.